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2020 (12) TMI 691 - HC - VAT and Sales TaxTaxability under VAT - online booking charges charged by a Cinema Hall Owner - Whether the online booking charges charged by a Cinema Hall Owner besides the cost of ticket for entry into the cinema hall and enjoy the entertainment in the form of a movie, is a part of taxable receipt by the Cinema Owner for the purposes of the Tamil Nadu Entertainment Tax Act, 1939 ? - appellant paid service tax on the same - HELD THAT - Similar issue decided in the case of PVR LTD., (FORMERLY KNOWN AS SPI CINEMAS PVT. LTD.) NEW DELHI VERSUS COMMERCIAL TAX OFFICER 2020 (10) TMI 778 - MADRAS HIGH COURT where it was held that levy of Service Tax and Entertainment Tax on online ticket booking charges are mutually exclusive. Assessee has paid Service Tax under Finance Act 1994 on such 'online booking charge' for the period from 01.07.2012. The Assessing Authority has also dealt with the definition of Section 3(7)(c) of the Act and has emphasized the words any payment for any purpose in addition to the payment for admission to the entertainment . The said reassessment order was passed exercising the powers under Section 7(2) of the Act 1939, and the Assessing Authority not only imposed tax at the rate of 30% on the online booking charges to the extent of ₹ 41,96,277/- but imposed penalty @ 150% under Section 7(3) of the Act to the extent of ₹ 62,94,416/- vide Assessment order dated 21 September 2015, for AY 2010-11. Following the same, demand set aside - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether online booking charges are part of taxable receipt under the Tamil Nadu Entertainment Tax Act, 1939? Analysis: The High Court of Madras addressed the issue of whether online booking charges, in addition to the cost of a cinema ticket, are subject to taxation under the Tamil Nadu Entertainment Tax Act, 1939. The court referred to a previous order in favor of the appellant, where it was highlighted that the payment for admission to entertainment is the key factor for levying Entertainment Tax. The court emphasized that online booking charges are not mandatory for entry into the cinema hall and are considered an additional payment for extra services provided by the cinema owner. The court noted that such charges are not uniformly applicable to all customers and are not a condition for attending the entertainment. Therefore, the court concluded that online booking charges do not fall within the scope of "payment for admission" as defined in the Act. The court distinguished the case of a Drive-in Theatre where different classes of consumers were charged varying rates based on the services provided. In the present case, the court clarified that the service of internet booking is outside the realm of the Entertainment Tax Act and is an optional service. The court stressed that only the cost paid by the customer for entry to attend the entertainment can be taxed, not for a separate service like online ticket booking. The court found support in previous judgments and the "pith and substance" theory applied by the Supreme Court, indicating that separate payments for separate facilities are not subject to Entertainment Tax. The court also highlighted that the Assessing Authority had imposed tax and penalty on online booking charges based on a reassessment order. However, the court ruled that such reassessment orders for the relevant years could not be sustained and quashed them. Consequently, the court allowed the writ appeals filed by the Assessee, setting aside the order of the learned Single Judge, with no costs imposed. The connected miscellaneous petitions were also closed as a result of the judgment. In conclusion, the High Court of Madras ruled in favor of the Assessee, stating that online booking charges are not part of taxable receipts under the Tamil Nadu Entertainment Tax Act, 1939. The court emphasized that such charges are not mandatory for entry into the cinema hall and do not constitute payment for admission to entertainment, thereby excluding them from the scope of Entertainment Tax.
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